Posted
by
Soulskill
on Monday March 05, 2012 @07:39PM
from the letting-the-chips-fall-where-they-may dept.

MrSeb writes "Three years ago today, AMD spun off its fab division, in a move the company claimed would allow it to more effectively leverage its assets, inject new capital into the foundry side of the business, and make it more competitive vis-à-vis Chipzilla. Today, that dream is dead. AMD announced today that it would give up its 8.8% equity stake in the company. When AMD created GlobalFoundries in 2009, the company held a 34.2% share in the foundry. The main thing that AMD gains from this deal is manufacturing flexibility. Previously, Sunnyvale had agreed to manufacture 28nm APUs solely with GlobalFoundries. This new agreement voids that arrangement, freeing AMD to work with TSMC and other foundries.. It's not an agreement that came cheap, though — not only is AMD giving up its 8.8% equity share of GF, it's agreed to pay the manufacturer some $425 million by the end of Q1 2013. AMD will take a $703M charge against the transaction. It's unclear how this move will pan out. We know AMD killed Krishna/Wichita due to manufacturing problems, Llano limped along for most of 2011, and GF's problems at 32nm impacted AMD's ability to sell 45nm chips into the channel. From a macroeconomic perspective, AMD is simply transferring its business to a foundry partner that's more able to meet its needs. One could argue that AMD's decision to get out of the foundry business is a logical extension of new-CEO Rory Read's plan to de-emphasize cutting-edge silicon in favor of SoCs. Time will tell."

AMD has been here before. More than once. And somehow has managed to escape oblivion each time.

AMD is still stuck in the manufacturing mentality of the 1980's where "do whatever it takes no matter what" was the mantra. Their former SDC, aka Fab 23, was full of these people, mostly from MMI, who tended to reject new ways of doing things and using better equipment and practices. They wasted millions on equipment that would be installed, qualified and then promptly destroyed by bad, primitive, caveman maintena

It was a smart (but expensive) strategic move for chasing the cutting edge, but if their business plan is to leave the cutting edge behind, then I fear we lost one of the biggest drivers of progress. Intel might have the technology, but AMD gives them the incentive to keep running with it.

I think it will be interesting to see if that gap closes this year. A big part of the problem for AMD is that the current compilers do not optimize properly for bulldozer chips. GCC promised it in the latest release and Microsoft has promised it when they release Windows 8. I have read some places that the performance gains can be more than 30% even on current chips. This is the problem of moving to a new architecture without the market clout to move the market with you.

Were I AMD, I'd keep my revenue streams rolling with whatever I could, while keeping a R&D side project for leapfrogging Intel off the books, so to speak. Simple gains (minor updates in their processes / designs) will not make the giant (Intel) hurt, they (AMD) need something a little more...special. Of course, the project will be risky, but the associated payoffs should be well worth the price -> that's including cost overruns, inflation, and assuming they screw-up their product launch.

I would love to see AMD do this, but honestly, outside of CPU/GPU hybrid tech (they do have a great graphics division after all) I don't see this happening. Honestly, they've never really been able to leapfrog Intel. The times they have had the lead had more to do with Intel missteps than AMD having advanced tech.

I have long been a big AMD fan, I'm just not sure they have the power to stay relevant in the cutting edge. At the moment AMD seems to agree. Perhaps they can keep pushing the midrange

I'd disagree that they have not had, at several points in time, superior technology. However, they do appear to be hurting in the workstation arena -> their server processors are sought after, but the latest Bulldozers appear to need some work. It's nice to know that we are finally getting some Hyperthreading on AMD processors, the same way Intel did with theirs years ago, and that is even better than Intel's, but like Intel's, it will take at least a two years to begin to have the desired effect.

Look at the motherboard chip sets. There are many intel based and amd based motherboards that support 32GB or more of RAM. The older i7 and amd3+ motherboards maxed out at 16GB or 4GB per slot. There was also no 8GB DDR3 RAM at the time. There are 8GB DDR3 RAM sticks now. There are some intel based motherboards that can take 64GB of RAM. I haven't seen any amd3 or amd3+ that can go to 64GB. Maybe with FM1 at some point. Most of the FM1 motherboards that I have seen only support 32GB. Considering FM1 looks l

No more of this stupid 125 watt and 95 watt nonsense. I'm stuck with exactly 4 systems in a 42U rack because the datacenter is not capable of providing more than one 15A circuit per rack. If I want to make that 8, I need sub-50watt parts.

Have a look at the Opteron 4256 EE - 8 x 1.6GHz, 35W TDP. I don't know what you do with with your servers, but for a threaded web server like Apache that is a very viable option me thinks.

Also, I realize Cutting Edge Silicon does not necessarily equal cutting edge, but until there is a technology that allows for a unified memory architecture, I don't see how a SoC will compete wish discrete components (or have incentive to on the cutting edge) that have a reason to be regularly upgraded for reasons other than CPU interaction.

They're a foundry. They make a lot of very different products, and don't design them. This limits their capability to design for manufacturing, and doesn't let them tweak their processes to match the designs. That's the disadvantage of abstraction - they have a good general solution which can easily be matched to many uses, but it will never be as good at a specific use than a solution designed explicitly for that use. They're also just a foundry - they only have to compete with the other foundries, not k

AMD isn't giving up design, just the foundary. And in future, Intel must compete with TSMC and friends in process technology, as opposed to their time tested strategy of cutting off AMD's air supply. Makes it more of a game now don't you think?

When you control the design and the manufacture, you have intimate knowledge of both. You can better design for the manufacturing process, and alter the manufacturing process to suit the design. This just isn't possible to the same extent when you work through a foundry. And not only that, there's overwhelming evidence that Intel's process know-how is better than TSMCs. TI don't think it's any coincidence that the prolific microprocessors have all been made by

When you control the design and the manufacture, you have intimate knowledge of both. You can better design for the manufacturing process, and alter the manufacturing process to suit the design. This just isn't possible to the same extent when you work through a foundry

True, but AMD has not opperated this way since they initially spun off Global Foundaries. Bobcat and Bulldozer were specifically designed to be portable between foundaries and not dependent on special process tweeks. AMD's recent experience with Global Foundaries was the worst of both worlds: limited control and poor execution. Since AMD doesn't have the money to re-enter the fab business, the only viable direction available was to cut the cord and become truly fabless. They might not get any better control but at least they should be able to find a foundary that can execute.

They are a node behind. TSMC just got their 28nm stuff out the door (they decided to skip the 32nm node and do only the 28nm half node). Products using it are on retail shelves, but only as of like a month ago. So where? Intel? Just about to launch 22nm for full retail availability. They are a node ahead, they are almost always a node ahead.

That would, by definition, make TSMC not cutting edge. If someone else is on newer technology than you, you aren't cutting edge. Not saying that is horrible or anything,

ARM is not going to threaten the x64 PC business, however much MS may want it. No RISC has ever managed to run that huge base of Windows software - not even Alphas w/ FX!32, and ARM will be even less capable of doing it. Yeah, they'll have native apps, like what MS ports there, but what that will do is badly mangle the brand image of Windows, where you will have one version of Windows that runs Windows software, and another that doesn't.

The two are not unrelated. ARM is pushing Intel on the high-volume, low margin end. ARM SoC vendors will sell you a SoC for less than Intel will sell you a CPU - and it will use a tenth the power. The high end is getting really small. Supercomputers are still around, but that entire market is well under a million CPUs per year, and it's being attacked by GPU and DSP makers. Worse, it's become a lot cheaper to design a custom ASIC over the past decade, so a lot of tasks where performance is all that mat

All this is correct, except that it ignores the elephant in the room - Wintel. For laptops, the x64 will remain the sole platform, and ARM ain't gonna change it. MS can port all the Windows 8 apps to ARM that it wants, but none of that will change the fact that most home users have software that they've either paid for, or must keep running on their newer PCs. That's why past attempts by Unix to dethrone Windows on the desktop always failed, that's a good part of the reason why Linux & BSD haven't do

It's like... Ford decides to spin off its auto business so it isn't tied down to one manufacturer, and can then produce Ford's at Chevy and Dodge and even Honda plants. Why does it seem like someone decided the AMD brand was more valuable than its product? Does this help the consumer in any way to separate brand from product?

I have this strange feeling that somebody got a really big bonus near the beginning of that move for the forethought and insight needed to expand the capital base of the combined operations. Now it's time to pay for the error, but that bonus money is already well offshore and out of harms way by now.

Yes it does help.I think they were stupid for spinning off GF in the first place, but, since they have, sloughing off the rest is a good thing. They now can shop around (within some limits*) for who has the best/most compatible with their design process at a given node. So at 45nM they may use UMC, while at 32 nM they stay with GF and for 22nM they go to TSMC.-nB
*Limits: good luck getting IBM or Intel to fab their chips IMHO.

All the "shopping around" in the world doesn't change the fact Intel has better fabs than anyone else. As I pointed out in another post TSMC just got 28nm fully online, retail parts on the market (AMD videocards mostly). That's the 32nm half node, they skipped over the 32nm node for some reason, which lead to delays for them. Ok fair enough but Intel has 22nm up and running full swing, retail availability coming shortly. They are, as usual, a node ahead.

Intel can pour money into process R&D because they have lots of money. It's easy to forget how much bigger Intel is than AMD. Intel spent about $6.5bn on R&D last year. This is more than AMD's total revenue. It is simply not possible for AMD to spend more than about a fifth of what Intel does on R&D. Their sales volumes are also much lower, so they can't amortise the R&D cost over a lot more chips. For every CPU AMD sells, Intel sells four. That means that if Intel spends one dollar p

Problem is that they are responsible for boosting this quarter's numbers, no matter what time 'this' refers to, and when companies have not been doing too well revenue-wise, they invariably pick such short term tactics to minimize the damage to their bottom line. Selling the fabs minimizes their liability, but also eliminates their guaranteed capacity when the market is hot, and could indeed end up eliminating them from the market simply b'cos they have nothing to sell.

It's like... Ford decides to spin off its auto business so it isn't tied down to one manufacturer, and can then produce Ford's at Chevy and Dodge and even Honda plants.

Chevy, Dodge and Honda are competitors of Ford, AMD isn't doing this to be able to manufacture chips at a foundry owned by Intel.

Why does it seem like someone decided the AMD brand was more valuable than its product?

Because you don't understand what's happening. This move enables AMD to build chips at any foundry, in fact it means they can use the best foundry rather than being tied to an underperforming one thus resulting in a better product.

Ya think? Why wouldn't this work for, say, Hardees? Hardees has a horrible franchise... the menu is similar to most of its competitors, but the implementation is crap. So can they just sell off their burger franchises and then use, say, KFC's and Long John Silver's franchises, to achieve better performance at the drive thru and customers' pallet? No... I don't understand business... but this just sounds like slight of hand. I think what really happened is when they "spun off the foundry," AMD ceased to exis

I've seen at airports multiple restaurants, including well-known chains and very different price points and styles (sit down vs. fastfood, etc.), that are all using the same kitchen - it's just four different front ends on the same backend.

Your example of restaurants works. You just don't understand that it works because, as you say, you don't understand business. To be specific, you don't understand the purpose of a business when you see one. I'm guessing Hardees sells fried chicken... assuming they do, the proper analogy here is that you say Hardees owns their own string of chicken farms throughout the USA. Hardees decides that their thing is making food with a specific flavor, not keeping birds alive until they reach the proper weight to be dead birds that are tasty. So they create a new company, and put the chicken farms into that new company's name. Now Hardees has to only focus on applying breading and spice to raw chicken before deep-frying it to a lovely crisp, and can let the new company focus on how much corn to mix into chicken feed to produce the largest, healthiest chickens in the shortest amount of time while still fulfilling their contractual duties to provide so many pounds of chicken meat to Hardees every month.

Now say that the new chicken farming business isn't doing a good job of raising their chickens... they are too small and kinda chewy. Hardees doesn't want you to buy a chewy bird from them. They may loose you as a customer. So, Hardees says to the new chicken farming company, "you are your own business and are not performing up to our standards, so we shall take our business elsewhere". Hardees starts buying chicken from another chicken farm company. Now you go to Hardees and your neighbor goes to KFC. Guess what? KFC and Hardees both buy their chicken from the same company. You get home and enjoy Gary the Chicken, and your neighbor is enjoying Larry the Chicken, who is Gary's younger brother by 3 minutes.

You do not go to Hardees to get a specific chicken. You go to get a chicken that is safe, edible, and has a particular flavor that Hardees supplies with their blend of spices and/or choice of frying oil. This is what is happening with AMD right now. You buy a hunk of silicone that conforms to an AMD design, and meets certain standards and quality that AMD is guaranteeing you that the chip will have. Who made that silicone, for the most part, is irrelevant to the customer. That is AMD's problem. If they choose a manufacture that is slow, unreliable, or ships AMD lots of defective products, then AMD will take their business to a manufacture that is more competent or better suits their needs. So basically, AMD has decided that they want to focus on chip design, not both chip design and chip manufacturing.

Kind of like how when Mini came back into existence it contracted BMW to make the cars, with BMW staying arms length until it was a huge success and they were purchased by BMW later? It worked for them.

Kind of like how when Mini came back into existence it contracted BMW to make the cars, with BMW staying arms length until it was a huge success and they were purchased by BMW later?

More like "BMW purchased the Rover Group, descendants of Austin/Morris/Leyland/etc., and makers of the original Mini, and, under BMW's ownership, they introduced the new MINI."

That might be like Intel buying up AMD and then using the AMD brand name, and perhaps designs, for a new line of Intel x86 processors for markets not served (or not well served) by existing Intel x86's.

(At this point, the car analogy now sits by the side of the road with its radiator spewing out steam and oil dripping from the engin

That might be like Intel buying up AMD and then using the AMD brand name, and perhaps designs, for a new line of Intel x86 processors for markets not served (or not well served) by existing Intel x86's.

Actually that's exactly what happens quite often in multiple industries. That's how Oldsmobile, Buick, Jeep, and many other car brands became parts of the big auto companies. And Celestial Seasonings, Hidden Valley Ranch salad dressings, Sara Lee, 90% of all alcohol brands, everything Pepsico and Yum Brands sell, and just about every food brand that's been around for more than a few years.

Complete non-sequitur! Small form factors would imply some advanced packaging solutions, which ain't what AMD was doing here - they're just going totally fabless. Small form factors is something useful for mobile platforms, and the main efforts in that are in die shrinking - requires good design of die, as well as appropriate aspect ratios, as well as package scaling. Some of the advanced package companies like Tessera are there, as well as packaging companies like Amkor. Not to forget advanced tooling

The ARM heads love to go on about that but as of yet there are no ARM chips that compete in the desktop space. ARM chips start going out around the level Intel chips start coming in. What's more, they'd face a real uphill battle due to binary compatibility. It is just easier to run a chip that'll run all your old shit unmodified. ARM would have to offer some serious benefits to win people over.

The ARM heads love to go on about that but as of yet there are no ARM chips that compete in the desktop space

In case you haven't been paying attention for the past 5 years, the desktop is a shrinking market. The big growth markets for CPUs are mobile and low power servers. If you want to know how well being the market leader in a shrinking market segment works out in the long run, just ask SGI...

shrinking? growth may not have been as big as previously, but I wouldn't call it shrinking.

but if you had been paying attention yourself, you'd remember reading the armheads comments about arm besting x86 about 5 years ago. and 10 years ago. hell, even on offline magazines 17 years ago. even the same shit about a supercomputer under your desk from cheap cpu's.

but they're for different markets. and one thing intel has is the fabs and amd doesn't. that's losing a lot.

The desktop market hasn't shrunk a bit, it just isn't growing as fast as it was, nor nearly as fast as personal devices like smartphones.

New computer markets don't tend to kill off old ones. Like mainframes. Not only are they still around and sold, but there are more of them now than when they were the only computers you could get. Desktops out number them by many orders of magnitude but they didn't kill them. Nor did laptops kill desktops nor will smartphones kill laptops (and desktops).

In case you haven't noticed, people like running their current software on new hardware they buy. The desktop market isn't going anywhere anytime soon. Why do you think x86 has dominated the last 25 years?

Plus about 10 ARM companies. Intel has a bigger challenge now than AMD has given them for years.

Meh, if Intel maintains domination over laptops, desktops, servers and supercomputers they'll have a ton of resources to push into the smartphone/tablet battle. I think they'll find being ten 30-pound kids doesn't match one 300-pound sumo wrestler. The Atom is still basically the same 2008 design which was designed for netbooks/nettops, Medfield and Clover Field this year are just repurposed stop gaps. Silvermont in 2013 is their first real smartphone/tablet design, I suspect it'll be a big wake-up call. In

That's a big if. Desktops, sure - but they're a shrinking market. Laptops? Well, I have one Intel laptop and one ARM laptop at the moment. The Intel one wins on raw speed, but the ARM one wins on everything else (battery life, cost, and so on). And increasingly laptops are likely to want to use the same chips as smartphones and tablets, which are rapidly growing markets. Servers? They increasingly care about power consumption. The A15 is likely to make big inroads into this market, because you can f

Despite all attempts by MS to pretend otherwise, desktops & laptops are still heavily locked on the Wintel platform, something that ARM ain't gonna change. For servers, the situation would be worse for ARM, since you now have in addition to Xeon & Opteron, the various server processors like Sparc, POWER and like you mentioned, MIPS - all of which have far greater performance than ARM does. Supercomputers do depend more on interconnects, but they still like to make do w/ fewer CPUs w/ greater perfo

I hope they know what they're doing because I for one do not look forward to a PC marketplace dominated by only Intel and Nvidia.

And you won't.

Because Intel needs AMD just like Microsoft needs Apple. If Intel wanted, they could crush AMD in a heartbeat, but they won't because once AMD dies, Intel's going to get a lot of scrutiny, even if the sole reason AMD died was their CEO did something stupid and it wasn't Intel's fault.

So AMD keeps the regulators off Intel's back, just like Apple keeps regulators off M

The difference between an Intel-only world and an Intel-AMD world would not be very great at this point. x86 development is already a walking corpse and there will not be significant advances in x86 performance ever again, regardless of whether or not AMD is in the market. x86 will only get about 50% faster than the current top of the line i7. The costs to moving the x86 performance bar have become high enough and the x86 market outlook is stagnant at best with mobile devices taking center stage. x86 do

Unlike AMD, Apple was never a microprocessor manufacturer - not even when they were part of the AIM alliance for PPC. Since they just bought their CPUs from IBM and Motorola, there was no question of them owning their fabs, but they did own their other manufacturing, and still do.

For Apples A-series processors, the situation is very different, since these are simple designs that most standard foundries can manufacture, w/o elaborate process tweaks that are necessary when making x64s or POWERs or other hi

AMD has seen the writing on the wall: there is very little incentive to spend the money required to further the state of the art in x86. Intel is slowing down its development pace on x86 and AMD is as well; there simply isn't much money in making faster x86 processors because they have already achieved sufficient speed for 95% of what 95% of consumers do with x86 CPUs 95% of the time.

What would be the point of sinking huge funds into becoming more competitive in a market that is going to become increasingl

This story strikes me as more gloomy for Global Foundries. AMD is effectively paying to get out of their stake in the company. Last I knew Global had ST and AMD for major customers only. Now with AMD obviously unhappy with the line yields and slow execution on advanced processing nodes we can only assume that they will at least in the short term be looking to TSMC. If Global is not able to quickly back fill with orders from somewhere else their cost situation is only going to get worse. The only bright poin

The e-350 was a very nice chip. Low power, but I could run vm ware under windows so I could run linux on a vm under win7 and still have 6- 8 hours of battery life in a 3.x lb laptop. AFAIK, atom cpus don't have hardware vm support or 64 bit support. While this summer's intel cpus will probably do better, I needed that last year, not this year. Sure, it'll play old games, but more importantly, it supported vmware, could be light, and had good battery life.

Is my understanding of this correct? I think that's a really bad move. When you have to rely on someone else to manufacture your product, only bad things can happen. When it's something as complex as a CPU, the risk shoots up several orders of magnitude.

Not anymore. Once you have no dedicated manufacturing capacity of your own, then during times of general market chip shortage, the fabs will go for the higher margin chips, which AMD can't be since they're selling them @ near break-even prices. The only advantage for AMD here is that that during times of inventory glut, they are under no pressure to keep ordering to keep the lines running, but downside even to that is that fabs would give them a lower priority when the market returns.

There are many advantages for AMD, they should have done this some time ago. Dedicated founderies with multiple customers can afford to front the billions required to keep on the leading edge of the feature size curve, and can't be mugged by Intel.

True, but problem w/ multiple foundries is that during times of high demands, they're not going to prioritize low margin CPUs from AMD. They'd also be less inclined to do process tweaks that may improve the yields w/ one customer, but impact their production w/ another.

For TSMC, I'd imagine that Apple's processors - the A5 and A6 - would have much higher margins than AMD's chips, despite being ARMs. Given that Apple gets premium prices for its iToys, I can easily see them signing service level agreements w/ TSMC that would trump just about any of TSMCs other customers - AMD included. TSMC's other customers include Qualcomm, Altera and Broadcom, and I'd imagine that they too would have more clout than AMD

Not so much dead, but during times of allocation, they'll find it much tougher to service their regular customers. W/ their own fabs, they at least had a committed capacity that would enable them to service their priority customers. Now that they're totally fabless, fabs like TSMC would be @ liberty to support them only when they have reliable forecasts, but drop them whenever the market is overheated.

After all, AMD's processors are far lower margin than a lot of the other processors that get fabbed fro